ESG Investment through Our Asset Management Business

ESG Initiatives through Our Asset Management Business

The Role of Asset Management Companies as Responsible Investors

Sompo Asset Management fully endorses the aims of Japan’s Stewardship Code, enacted in 2014, which sets forth principles for responsible institutional investors, and has voluntarily opted to adopt the code. The company believes that stewardship activities such as constructive dialogue with investee companies and the exercising of voting rights will promote the value of investee companies and their sustainable growth, and consequently contribute to the sustainable development of society and the economy as a whole.
Since its founding, Sompo Asset Management has been systematically developing its operations, focusing on active management that aims to acquire mid- to long-term investment returns. The Company works to expand returns on investments by accurately grasping not only financial information but also other information, including ESG (Environment, Social and Governance) factors, and eliciting appropriate investment value to help our clients build their assets in mid- to long-term.

Efforts to Establish a Sustainable Investment Chain

Sompo Asset Management aims to maximize returns on capital investments by clients through investment in stocks and others. Meanwhile, returns on investment are not generated directly by the asset management company, rather the source of the return is the mid- to long-term revenue generated by the business activities of the investee companies. The Company is merely a bridge in the investment chain that links its clients to those companies. Consequently, they believe that for an asset management company to deliver excellent results, having a deep understanding of the target companies’ activities and revenue structure, conducting appropriate value evaluations, and actively selecting companies that are worth investing in are essential as an accountable institutional investor.
The Company’s management style contributes to the establishment of sustainable investment chains in which the Japan’s Stewardship Code and corporate governance code function organically. The Company believes that thoroughly engaging in activities to provide high quality active management contributes to the sustainable development of the investee companies as well as the wider society and the economy as a whole.

Relationship between Investment Value Evaluations and ESG Factors (ESG Integration)

Sompo Asset Management constantly tracks the situation at and continuously evaluates the investment value of predetermined potential investee companies, regardless of whether currently an investee company. It is important to accurately grasp not only financial information but also non-financial information, including ESG data, as part of active management that aims to acquire mid- to long-term investment revenue, while taking an interest in enhancement of the value of the investee companies and their sustainable growth. The Company integrates ESG factors into its management process by constantly monitoring companies’ ESG data and comprehensively evaluating such information as an investment value.

Dialogue with Companies

For companies and investors to engage in constructive dialogue, both parties need to share the same concerns. Sompo Asset Management focuses on understanding companies’ added value creation and distribution process as a means to accurately grasp investee companies’ mid- to long-term profitability, and financial and capital policies. The Company promotes mutual awareness and constructive communication with the investee companies in an effort to solve problems by keeping corporate value enhancement and sustainable growth, both shared aims, at the core of those dialogues.
In fiscal year 2019, the Company identified approximately 700 potential investee companies and, through the research by its analysts, was able to hold 656 individual dialogues and participate in 1,883 briefings, eliciting a total of 2,539 opportunities for dialogue.

Strengthening the Internal Organization

In April 2017 Sompo Asset Management established Responsible Investment Office as an organization to promote responsible investment, including stewardship activities, and assigned full-time ESG specialists to the Office.
The concept of responsible investment and ESG investment, advocated by global initiatives such as the United Nations Principles for Responsible Investment (PRI), is becoming a common understanding among institutional investors around the world. The Company will engage in PRI and other related initiatives even more proactively both within Japan and overseas through the work of ESG specialists, and further promote responsible investments.